Episode 173: A CMO's Approach to Mastering Pay Transparency (an interview with Sarah Reynolds)
In this enlightening episode of the Digital HR Leaders Podcast, host David Green is joined by Sarah Reynolds, Chief Marketing Officer of HiBob and a leading voice in HR technology.
With the backdrop of the new EU Directive on pay transparency, this conversation delves into the evolving landscape of fair pay practices, transcending beyond mere legal compliance to a broader commitment to workplace equity.
In this episode we will:
Explore how HR can learn from marketing;
Learn about the importance of pay transparency for diversity, equity, inclusion and belonging including Sarah’s experiences as non-binary;
Understand the broader business benefits of pay transparency, extending beyond legal compliance;
Discover the obstacles organisations encounter while implementing pay transparency and learn about the best practices for overcoming these challenges;
Discuss the crucial balance between pay transparency and the privacy and security of employee data;
Learn about effective communication techniques that organisations can employ to facilitate discussions around pay.
This episode, sponsored by HiBob, the modern HR platform for how you and your people work today, is an invaluable resource for HR professionals and business leaders seeking to navigate the complexities of pay transparency in today's workplace.
For more information on HiBob, check out at www.hibob.com.
[0:00:00] David Green: Research extols the benefits of pay transparency for both organisations and employees. It is about much more than compliance with legal requirements. Pay transparency can also drive employee trust, engagement, retention, and performance. My guest on this episode, Sarah Reynolds, Chief Marketing Officer at HR platform HiBob, recently gave a compelling talk at UNLEASH on pay transparency, offering their unique insights into their personal experiences as a non-binary individual. Sarah's perspective on the topic sheds light on the importance of pay transparency, not just for legal compliance, but as a fundamental aspect of promoting diversity, equity, inclusion and belonging in the workplace.
Throughout our conversation, Sarah sheds light on the intersection of pay transparency with broader workplace issues, and the challenges organisations face on this journey, as well as guidance and best practice for implementing transparent pay strategies effectively. From understanding the nuances of pay data, to communicating pay structures within an organisation, we'll explore the multifaceted aspects of this topic to help HR leaders looking to navigate the complex terrain of pay transparency. So, without further ado, let's get started with a brief introduction from Sarah on their career background and role at HiBob.
Sarah, thank you for joining me today on the show. As the first Chief Marketing Officer to be a guest, I'd love to learn more about your background and responsibilities at HiBob.
[0:01:58] Sarah Reynolds: Sure. So I'm Chief Marketing Officer at an HR technology company called HiBob. HiBob is, we're about 800 employees globally, and we have about 3,600 customers. And we describe ourselves a bit jokingly maybe as HR technology that your employees actually like to use. We serve customers who have a really modern people-first approach to their business, who often operate in a global mindset, and who are midsize, which for us is between about 100 employees and maybe 6,000 or 8,000 employees in size, so it can really range.
A little bit about me, in addition to being a kick-ass marketer, I am also very proudly non-binary. My pronouns in English are they and them, and I bring a lot of focus to DEI and B to my marketing work. I talk and write widely about important topics like pay equity and LGBTQIA+ inclusion, as well as things like how to be more inclusive in your marketing and how to create great HR strategies and HR programmes that your employees, especially those in marginalised communities, can take advantage of or can see themselves sort of well-represented and well-supported in your workforce. So, thank you so much again for having me.
[0:03:20] David Green: No, it's great to have you on the show, Sarah, and I know we're going to dig into some of those topics that you mentioned there as well. And actually, you gave some data around HiBob, you've grown quite significantly in the last year. We had Ronni Zehavi, the CEO, as a guest on the show towards the end of last year as well, and I think you've grown from 700 to 800 people and from 3,000 to 3,600 customers, so you're obviously going through quite a lot of growth at the moment.
[0:03:45] Sarah Reynolds: Yes, we are very lucky to be experiencing tremendous growth at HiBob and to be celebrating, along with our customers, almost 800,000 employees who use HiBob every single day. We expect to cross a million employees who use HiBob next year some time, so look out for probably a fun invitation to a great party!
[0:04:09] David Green: We will, we will look out for that. Sarah, as you're probably aware, most of our listeners work in HR. As a Chief Marketing Officer who works in the HR and HR technology field, what guidance would you offer and what HR can learn from marketing?
[0:04:23] Sarah Reynolds: I think that's a really interesting question. I don't know if you know Sapient Insights, but it's a research firm out of the US here, led by a woman named Stacey Harris. She gives the closing keynote at the HR Technology Conference every single year. And one of the things that she talks about, or she surveys the HR community about, is how many HR folks feel that they are a strategic part of their business. And she actually has a goal of getting this to 55% of respondents saying yes by 2025. That means that today, around half of the people who respond to her survey, they say that they don't actually think that their HR department is viewed as strategic by the business, and I think that that is an incredible shame, because I have had the opportunity to work with some of the best and brightest HR folks on the planet, and I can tell you that just like the best and brightest marketing folks, they are very strategic. And in fact, they have access to quite a lot of data and quite a lot of data that their business stakeholders should really care about.
But oftentimes, the communications gap is not about a lack of data, but it's rather about the storytelling aspect. And if I think about what HR leaders can maybe learn from marketers, it's not so much about the data itself. You all have lots of data in your organisation, you know how many employees you had to replace last year, you know what your employee engagement surveys looked like, you know what your cost of hiring was, you know a tremendous amount of information that in fact impacts the organisation's bottom line. What you don't maybe know is how to pull all of that together and tell a great story to the spreadsheet people, or the business executives in your organisation, who don't think about the people questions, the strategic people questions that you answer, but rather do think about things like the P&L. So, how do you tell a story about P&L impact? How do you use something like data around hiring or about turnover to tell a story about why you should be investing in your people, or why you should be investing in HR programmes or technologies?
People are the only capital asset in your organisation, or the only asset in your organisation, that appreciates in value. If you're in manufacturing and you buy a piece of equipment, it's worth less the minute you install it in the factory and every day that you run it, than the day that you bought it. People are the opposite. People are the thing that really drives your business forward. They're the thing that helps you cope with all of the change that we are all experiencing every single day in the world around us. And if you can tell a story that ties all of the great strategic HR work you do back to the P&L for the folks who look at spreadsheets and who think about people not as people maybe but as lines on those spreadsheets, or who think about a broader business conversation about P&L impact, then you're going to be really well positioned to tell a story about how your work and how your investment truly is a strategic part of the business.
[0:07:18] David Green: No, it's a really good point. And actually, I'm a bit of an optimist. I think that Stacey may well get to her target in 2025. I think that HR is kind of on that journey from what its traditional role is as support function, to be a strategic partner. We're certainly seeing that in many organisations that we work with at Insight222, and I think the pandemic probably accelerated that a little bit. But there's so much happening in the world at the moment that's confronting organisations, but a lot of them are people challenges at the end of the day, and organisations need their HR functions to step up and be that strategic partner to the business. Flip side of that, what do you think marketing functions can learn from HR?
[0:07:59] Sarah Reynolds: That's another great question. I think that both HR and marketers, in a way, can be professional communicators. If I think about where internal communication sits between our two teams, oftentimes it's a responsibility of the marketing team, or it's a responsibility of HR, or it's a really great opportunity for a partnership between the two. I think also about things that I care and talk about a lot, something like accessibility in your organisation, right? You might be thinking of that from an HR perspective; your marketing team should be thinking about that from a marketing perspective; your product team might even be thinking about that from a product perspective. It's a great opportunity for you to build these cross-functional partnerships and tackle things maybe with your friends in marketing, like internal comms or accessibility, or employer branding is another great opportunity.
I've seen really interesting employer branding work that I've thought, "Hey, that maybe isn't our employer brand, but I can look at that and I can understand there's an opportunity here for me to make that look more like my marketing for prospects and customers who might be seeing that marketing right in line with the marketing that I am doing in LinkedIn" LinkedIn doesn't care if your organisation is buying an ad for an employer brand message or the next organisation is buying an ad for a commercial message, right? It's going to be showed right in line next to each other. And I think it's a great opportunity to take a look at that and take a look at a fresh perspective on how we communicate about our business and how we communicate to the market and how we communicate about what we care about, and really translate that into a great opportunity, I think, for marketing.
We also have the unique opportunity at HiBob to do something we call, "Drink our own Merlot", which is, "Hey, we're an HR technology company, we should have some pretty great HR", and I'm really happy to say that we do. And also, we get to use that in our marketing. So, I actually get to learn a lot about our people and culture programmes from my friends in HR, (a) because some of them are joint initiatives, but (b) because they're also part of the way that we tell our story to the market and we represent the value of HiBob as not just technology, but also as all of these great ideas and all of these great resources and all of these great programmes that we are piloting in our organisation, and we're excited to tell the market about as well.
[0:10:30] David Green: Sarah, I'm going to talk about one of the topics you mentioned right at the start that you're passionate about, pay equity and pay transparency, and I know you gave a fantastic recent talk at the UNLEASH show around that. And then obviously, you mentioned that it was a real passion as well. Can you share what inspired you to delve into this topic?
[0:11:54] Sarah Reynolds: So, I think the first thing is, I have been a pay equity advocate for a really long time. And most of the legislators that you talk to who think about things like pay transparency laws or opportunity transparency laws, having to be transparent about how promotional decisions are made in your organisation, they're coming at it not just because they think that the transparency is important, but ultimately to try and crack the nut on pay equity. Pay equity or pay inequities are things that continue to plague us as a society, whether it's between genders or races or other protected classes or characteristics. These are things that continue to haunt us in the world of work at a time when many of us in the end of 2023 here would maybe hope that we have moved past these things, right?
So, legislatures are coming at this from the goal of, "Hey, how do we address pay inequities or how do we how do we make it harder for people to get away with pay inequities in the workplace?" Well, we make things more transparent. Sunlight's the best disinfectant. I think that's the old saying. It's a great opportunity to look at things from that perspective. So, I think about pay transparency, not just I think about it as the right thing to do, but I also think about it as something that I know is placing, because of this compliance motion, a lot of pressure on organisations to understand what they need to do. And it's also a topic that I think is fundamentally misunderstood by many, many people, especially employees, when they read the news about pay transparency.
So, you see all of this great news coverage about this compliance motion or about these new laws coming into effect in places like New York City or the EU's new salary transparency directive, and you think maybe mistakenly that pay transparency means that you're going to be able to log into your company's website or see a list of everyone's name and their face and their pronouns and their job title and their pay online. And while there are organisations who choose to do that, either from values and employer branding perspective, or because like the US federal government, they're actually legally mandated to, that's not usually what pay transparency means.
Pay transparency is a spectrum and I think that educating folks and helping folks figure out where do they fall on that spectrum of pay transparency is a really, really interesting and thought-provoking question that goes way beyond, "What is the law that I need to comply with?" and starts to talk about things that are really important conversations, "What is my company culture? What is our comfort, our own comfort internally in discussing pay? Which regions do I operate in? How do those laws complement each other or challenge each other? What am I going to need to do to be ready for each of those things in turn to come into play in my organisation? And then how do I do something like educate my employees, or educate my managers who sometimes don't know how pay decisions are made internally, and educate them and make it a productive conversation that really does help us move the needle on adjusting how people think about pay and ultimately adjusting or removing pay inequities in the workplace?"
[0:15:09] David Green: That's really good. And obviously there is more legislation coming in, which is I think a good thing. It does cause challenges for organisations, but if there's legislation, then hopefully we start to see change moving forward as well. But let's move away from the compliance side of discussion and focus more on the business outcomes of pay transparency. You mentioned a few of those, I think there, Sarah, but what would you say are the main benefits of transparent pay practices for the organisation itself?
[0:15:37] Sarah Reynolds: So, I think that there's certainly the aspect of compliance; you don't want to face a fine or a penalty or bad press. So, in the US for example, in New York, you can be fined up to $250,000 for not posting a salary range on a job description. Colorado recently levied a set of fines I think that were many tens of thousands of dollars for their own compliance in this same area. In the UK, if you fail to report your gender pay gap, you actually get named and shamed on a government website saying, "These organisations fail to comply with the law". Your gender pay gap also gets reported when you do report it. So, if you have a really significant gender pay gap that you're not working to address, well your company name's going up on a website and that's public information if you have more than 250 employees in the UK, and it's certainly something that contributes to the discussion about pay transparency from an organisational standpoint.
A lot of the reason that the conversation in this area does focus on compliance sometimes is because when you do talk to business stakeholders, one of the main ways that you bring their attention to this topic is by saying, "Hey, this comes with a compliance requirement; this comes with a potential financial or bad press penalty for our organisation that you do not want to be in the business of incurring". Then, though, it becomes a conversation about, "Why, beyond compliance, is this beneficial for our organisation?", which is what I think your question is trying to get at.
So for us, a lot of the conversation in the US, where I'm based, talks about how this is the new normal for candidates. Candidates want to know what a position pays before they apply, right? Work is like the exchange of labour for hopefully fair compensation, and if you go by that definition, you want to know that the job that you're applying for is going to pay you enough to support your family and pay your bills, and it's going to remunerate you for the work that you do appropriately and fairly and competitively; so, you want to know. Then the conversation moves on to the employees within your organisation, because there's a lot of sensitivity like, okay, I'm going to post, again for example, a pay range for a job out in the wild, right? Candidates are going to be able to see it. But oh, gosh, what happens when an employee in my organisation sees it as well? Well, employees also increasingly demand transparency into what they are paid and how their pay is fair.
An employee of mine in the UK recently said to me, "I don't care what other people make, I care that my pay personally is fair". And I saw an incredible stat from the folks at Visier, which is a people analytics company, that said that a majority of employees would change jobs. They would take the same job for the same pay at a different company tomorrow if more transparency came along with that job change. So, if you run a more transparent organisation, you could offer them the exact same job with the exact same pay and they would come over, right? That's a huge risk to your organisation if suddenly you're saying, not only is this impacting our ability to attract candidates, but it's also impacting our ability to keep great folks in our organisation. And it's just about, again, being transparent.
So, I think that whether you look at it from the hiring and turnover perspective, or you look at it from a productivity perspective, I saw a study out of the US that said that being more transparent about pay actually decreases people's worry about their pay fairness and it can lead to increased productivity because they don't have to take that cognitive load that they were applying to worrying about their their pay or worrying about if it was fair or how to compare it, and they can apply that to work instead. There's also studies that say that if you're transparent with your employees about pay at their job level and the next job level up, that they will actually work harder for a promotion, because suddenly they see the salary progression opportunity that's available to them in the organisation and they say, "Hey, I want to work towards my next role being at HiBob, as opposed to being at a different company"
So, there's lots of really great reasons why you should adopt a more transparent approach to pay and compensation and rewards more generally in your organisation as you try and move forward in this conversation with your business stakeholders about, "Hey, what is this issue really about?"
[0:20:09] David Green: Yeah, I mean, essentially, it's the right thing to do, but it's also the right thing to do when it comes to competing for talent, as you said, both whether you want to try to attract people to your organisation or you're trying to retain the best talent as well, so a really important element. And, Sarah, from your experience as being non-binary, how does pay transparency intersect with the broader issues of diversity, equity, and inclusion in the workplace?
[0:20:36] Sarah Reynolds: Yeah, so I think the first thing that's kind of interesting is you mentioned the UK pay gap reporting, which asks you to report, if you have more than 250 employees, the gender pay gap between men and women in your organisation. If you employ folks like me, we are not counted. Fascinating! I think that when I talk to really forward-thinking HR folks, they're thinking about, "Okay, legal compliance is one thing, but I actually want to understand what my own data says about how we are complying or how we are becoming more equitable as an organisation, or where we might have things that we need to address". So for example, you might look at your pay equity reporting internally today by just men and women. I might encourage you to expand that to say, "Hey, how does this impact folks who identify as non-binary?" You might have, depending on the data that you collect or that you ask your employees to self-ID, you might have more information available to you. You might know if folks identify as trans, and you might be able to see if there is an impact on their pay. Statistically, there usually is. You might be able to look at race, religion, ethnicity, age. In some places, in some companies in the US, your political affiliation is a protected class, we call it, or a protected characteristic in the UK.
There are lots of different things that if you are collecting data or you're encouraging your employees to tell you a little bit more about themselves, you can use that data for really good reasons, and you can start to understand, "Hey, how does pay equity stack up when I start to look across different marginalised groups?" There's this idea of intersectionality, that all of these different aspects of diversity, they come into play, and sometimes they come into play in a negative way that contributes to marginalisation of these folks. It's why we have different equal pay days for women in general versus maybe black women or women who identify as Native American or indigenous. It's why there are really staggering statistics about the disparities in pay that exist between people of colour of all genders and folks who identify as white. There's a reason that I know that there's disparities between folks who identify like me as being trans and folks who identify as cisgender, so a lot of different ways to cut that data, and there's a lot more beyond just the government requirement for a gender pay gap report that you can go into once you have that data in your organisation and you're able to access it and really understand it in a more interesting way.
[0:23:24] David Green: And I guess the more data of this nature that you collect, the more important that, not just for pay transparency, but for any reasons that you might use that data, you've got to create that trust with the employees that you're collecting that data from because political affiliation, for example, it's not a traditional question that would be asked in a survey, and then the question might be for employees, "But why are you asking that?" So, you've got to be very clear as to, this is the data we want to collect, this is why we're going to collect it, and these are the potential benefits to you and other employees, I guess.
[0:23:58] Sarah Reynolds: Yeah, there's data that you're, in different geographies, required to collect. So, in the US for example, EEOC reporting asks you to identify your gender, although I'm only offered male, female, and prefer not to say. I would prefer to say, you just won't let me. It asked me about my race and ethnicity, and it asked me about my disability and veteran status. So that data, for example, is a legal requirement. Data outside of that, for example, is something that you need your employees to volunteer to you, and that's where that culture of trust comes in. So, if you want your employees to update their employee record in a system like Bob and tell you how they identify, you need to be really clear with them what you are doing with that data, because you're right; if you're asking someone to volunteer that information about themselves, they want to know that that data is going to be used for good and not for evil.
So, you might talk to them about the pay equity analyses that you would like to run and what that will mean for your organisation when you have that data available; you might also just talk to them about what it means for employee engagement surveys. Wouldn't it be great if you could take your employee engagement data and understand if people of colour in your organisation were having a dramatically different employee experience than others? Wouldn't it be great if you could understand if non-binary employees or members of the LGBTQIA+ community were having a dramatically different experience of your organisation? It's really powerful, data-driven, strategic HR work, but it does require you to create that dialogue and that trust with employees, and you're never going to get to 100%. You can't require that people tell you these things; there's always going to be people who prefer not to say, which is why it's critical to offer that as an option.
But for the folks who do, and the folks who sort of trailblaze, you want to really offer them the ability to see that data used for this interesting statistical analysis that ultimately benefits them in some way. If you're going to say, "Hey, my LGBTQIA+ employees are having not so great of an employee experience than other folks", what are you going to do about it? How are you going to get your ERG involved? How are you going to get programmes off the ground to make sure that they feel just as supported as other employees in your organisation? It's a really great conversation starter, but it does have to be a conversation. It can't just be something that you say, "Hey, yeah, tell us about yourself".
[0:26:25] David Green: When undergoing the analysis, what are some of the insights that you've seen organisations uncover in this area?
[0:27:25] Sarah Reynolds: I do think that pay equity or pay transparency, it's a good reason to kick off the type of pay gap analysis that we're talking about. Whether you're looking at just your market and competitiveness of your pay, lots of organisations are shocked to learn that, especially because the market right now is a little bit weird, depending on the GEOs that you recruit in, some market movement is really fast for hot jobs right now, or hot skills right now, some jobs not so much, there's been much more stagnation, right?
So, if you're thinking about a competitive, market competition analysis, and you start looking for the first time at data about what your competitors for talent or what other companies of your similar size in industry are paying for similar jobs, you might be surprised to find that you have a pretty big gap to the market. And you need to make not only an adjustment to the range that you are paying for the jobs in your organisation, but also where your employees fall within that range. Because it's not enough to just say, "Oh, we hired someone in at $50,000, now the job costs $100,000 to recruit the next person into that role", you have to adjust the person who's making $50,000 to keep pace with the market if you're going to bring in somebody else at $100, or if you don't want to lose that person to a higher paid job in another place.
Then there's the internal analysis, the pay fairness and pay equity. You want to look at all of those different cuts that we talked about, how does your pay compare across different locations; how does it compare across different seniority levels, against different protected classes or characteristics; how does it compare across genders; how does it compare between levels of tenure in the organisation; are we effectively rewarding someone who has been here a long time and who has been really loyal to the organisation; how does it compare between managers and subordinates? There's this idea of salary compression. That's either where you bring in somebody who's highly paid from the market and you have folks in the same job who are paid less because of historically where the market had been when you hired them, or because their increases haven't kept pace with that market movement. Or there's the idea of like, "Hey, I have a bunch of individual contributors who are making more than their manager. What do I do about all of these different scenarios?
There's a lot of different things that an analyst friend of mine called it the warts of your current pay programme. And for a long time, there was a defence legally that said like, "Hey, yeah, we never looked at our pay and how it compared and therefore we can't be held accountable for all of these warts in our pay programme". That's no longer an affirmative defence though, friends. So, do the analysis, understand what you've got, and then understand what it's going to cost to potentially make adjustments. Most of the companies we work with, they don't do one adjustment and call it good, they do a series of adjustments over time. They're trying to bring people in line with the market over time, they're trying to adjust pay internally over time, they're trying to shift their market position for certain roles over time.
But figure out what it's going to cost to adjust, and then again, it's a great conversation to have with your business stakeholders to help them understand, "Hey, we're preparing to be more transparent about pay in the organisation. We have uncovered a couple of things that we need to take care of. Here are a couple of scenarios for how we would take care of those as an organisation, and here's what we think that's going to cost". That's a really great, again, strategic HR conversation that you can be having with your C-suite, with your board of directors, to help them understand that pay transparency isn't just like a light switch that happens one day. There's a lot of work that goes into preparing for it and addressing some of those so-called warts in your compensation programme.
[0:31:06] David Green: What are some of the common challenges that organisations face when they're trying to implement pay transparency; and how can they overcome these hurdles, how have you seen some of the companies you work with at HiBob, overcome those hurdles?
[0:31:21] Sarah Reynolds: I definitely think communication is one of the biggest ones. If you leave out the step of training your managers, whether it's to explain your pay philosophy, which is sort of the statement about how pay decisions are made in your organisation, or you don't train them about how to make data-driven pay decisions themselves when it comes to something like the annual compensation cycle, or you just don't train them about how to answer questions from employees. I always say, employees don't write you an email that's like, "Hi, in three weeks' time, I'm going to come to my one-on-one, and I'm going to ask a lot of uncomfortable questions about my pay and how it's determined. And so, you have three weeks to get your ducks in a row with HR and come back prepared to answer my question". That is not how that happens, friends.
Your employees show up to your managers every single day and ask questions. And it's your manager's job to be your first line to answer those questions back to employees. And I promise you that you can fundamentally break your employees' perception of the organisation if you get a manager who flubs that question, because it will fundamentally change the way that the employee views their manager, and it will fundamentally change the way the employee views your organisation and your readiness and your fairness and your ability to talk about sensitive topics like this. So, train, train, please train your managers, right? Educate your employees, absolutely; train your managers, definitely. Make sure that your managers can answer questions like what the organisation's compensation philosophy is. Make sure you give your managers, if you can, access to data about how their employees compare to the ranges or how even ranges are determined in your organisation, if you have ranges for every single job.
I know at HiBob, for example, when I go to do our biannual salary cycle, I can actually see the range for each of my employees' jobs and where they fall within the range, and I can make adjustments based on their position in range, I can see their performance information right in line with that. I can see all of the data that I need all in one place to understand, "Okay, how am I going to make a fair, data-driven, unbiased decision about pay?" And then, how am I going to communicate it to the employee; what information am I allowed to share with the employee; am I allowed to tell them where they are in their range; am I allowed to tell them what their range is; am I allowed to tell them what the range above theirs is in the same job family; what information am I allowed to give them, and how can I best use that to have a really productive conversation with the employee, so that pay doesn't become this emotional, scary, intimidating topic to talk about, but rather pay is like the springboard for a great conversation about performance, or a great conversation about career opportunity and career progression?
[0:34:24] David Green: Yeah, and we've both talked about the importance of communication, you particularly, even in that last answer there, Sarah. Are there specific communication strategies, maybe some examples that you've seen have worked in organisations that listeners can think about and maybe apply?
[0:34:41] Sarah Reynolds: Yeah, so if, for example, you have operations in a state that requires you to post a job range on your job descriptions or a pay range on your job descriptions, don't just post it to LinkedIn. You'd be surprised how quickly your employees are going to find that. Have a great conversation ahead of time to write an internal communications memo, "Hey, managers, this is happening; hey, employees, this is happening. We operate in New York City" California, Colorado, whatever state, Massachusetts, whatever state you are required to post in, "we will be posting jobs going forward with pay ranges attached. These pay ranges are the same as the ones that we use for you internally. And if you have any questions about it, here's who to go to. Go to your manager".
Then make sure that your managers are given the training about, "Hey, an employee comes to me and says, 'It says the range for this job is $76,000 to $85,000, and I make $73,000. What's happening?'" How do you have that conversation effectively with that employee? How do you not just say, "Let me shoot, let me get back to you, or let me call HR to get back to you"? What do you actually say when that happens to you as a manager? How do you transition it into a conversation about, "Hey, maybe this employee isn't performing up to expectations", and you use it as a reinforcement touchpoint for what they need to do better in order to progress in the organisation.
If your employee comes to you and says, "Hey, my right to discuss pay in the US, if I'm an individual contributor, is federally protected. So, I compared notes with my individual contributor friends, and Sally makes more than me", how do you turn that into a conversation, not about what the employee and Sally make, but about how your organisation sets pay, how you can compensate people, how you can move people through a range, how you can reward them for something like tenure, for example? Or how maybe skills are different and, "This is a great opportunity for you to learn project management, which Sally has in her toolbox already". How do you make it a conversation about what can we do to get you to the next step, or to understand, "Hey, what is it besides pay that motivates you in the organisation?"
There's a million different things I think that you can do with your managers to try and have a more productive discussion. But I think it does come down to actually building out a plan, it's not going to be a light switch. You need to do the work ahead of time to understand if you have those warts that we talked about; you need to make adjustments to the things that you have found, close gaps; you need to make a plan for what's going to happen when you set these things live; you need to make a plan for having this great training available for your managers, or any sort of educational opportunity happening for your employees; you need to have a plan for hiring managers. What happens if a candidate comes in and says, "Yeah, I know that your role says $76,000 to $85,000, but I'd like to make $130,000"; what do you do then? How do you make sure that they're having really productive conversations about pay in the recruiting process, in the performance process, in the annual review cycle, whatever it is? There's a lot of different opportunities for you to make that, again, just a really productive conversation, as opposed to something that's going to set them off on the wrong foot.
[0:38:21] David Green: So, Sarah, penultimate question, as I said near the start, most of the people listening to this podcast are HR leaders, HR professionals. Many of those might be thinking, "Okay, we need to get better around pay transparency". If you could give maybe main insights or best practices for organisations that are just getting started towards this journey to pay transparency, what would they be?
[0:38:45] Sarah Reynolds: Sure. So, the first one I would say is, determine your pay philosophy. That's the statement about how pay decisions are made in your organisation. You'd be surprised how many organisations operate without a clear statement of what their philosophy towards pay is. How are you rewarding people; how do you make decisions? The next is, get some data. There's great HR-reported sources of salary survey data which can tell you what companies like yours are paying for similar jobs. We have a great partnership with a company called Mercer and there's others out there. But if you can't afford that or you're just starting on this journey, there are also great resources online that your employees, by the way, already have access to, where you can just google and get a pretty reputable answer about what jobs are paying.
Take three of those free sources, whether you use salary.com or PayScale or Glassdoor or LinkedIn or Indeed, or wherever you are looking at that potential information, and average them together and use that as a data point for how you make data-driven, market-rate-driven compensation decisions. Don't just rely on your managers saying, "Hey, yeah, I think $90,000", or don't just rely on asking candidates what do they want to be paid now, and using that as your benchmark. Use some data, whether it's free, or you have the opportunity to buy something in the salary survey world to be able to benchmark your jobs against. Some data is better than no data. Create a range, have ranges for your jobs, or at least broad bands in terms of maybe what all the levels in your organisation look like, how do they compare; how do they increase as you go up in your seniority in the organisation? Set up some frameworks about, what are the jobs in our organisation and what should we be paying for those jobs?
Then finally, figure out what level of transparency is right for you. When you've done your homework, when you've done the gap analysis, and when you've done the evaluation, the market pricing activity, figure out, "Okay, we know what our compliance requirements are, we've talked to our legal team or our outside counsel. We know what we need to do, and now let's talk about what can we do as we move towards transparency", in addition to that to be able to say, "Okay, everything we do, just like we have a compensation philosophy, let's have this philosophy about our transparency. Everything we do is going to be guided by, for example, our organisation believes really strongly in career-pathing conversations, and so we do want to show employees not just the range for their job, but the next job in their job family". Great.
Use that as your north star and use that to guide how you're going to implement all the other things that we talked about: great communications plan, level setting with training for managers and employees, data access in your organisation. That means that you've got to show employees this and this thing over here, you've got to give managers the same level of data access. It's got to be on demand, it's got to be live, you don't want it in a spreadsheet, you want it to be in a system where it's secure, where they can see just the information you want them to have, not the information you don't want them to have, and take the time to really think about, "Hey, what does that look like for my organisation and what's right for us, not just what is everybody else doing?"
[0:42:08] David Green: Some really good guidance there. We're now going to shift to the last question, which is the question we're asking everyone on this series, which HiBob is kindly sponsoring. As we approach the end of 2023, what do you think will be the key priorities for HR as we head into 2024?
[0:42:26] Sarah Reynolds: I hope that, like you, we will see that 55% in 2025 come much sooner than 2025. I think you're right, the pandemic really accelerated folks' understanding of the strategic role of HR, but that number was still 50% in this year's survey of survey respondents saying that their HR function is viewed as strategic. I think that it is incredibly important that we move the needle on that and that we use things like pay transparency to have a strategic discussion with the folks in our C-suite or at our board of directors' level about HR's impact on the business.
I also think that next year, if I think about all the things that are happening in the world right now and I could give one wishlist item for my work with HR practitioners, it will be that folks wake up and realise that they do not or they should not wait for laws to protect their marginalised employees. If you have employees like me who identify as non-binary or trans, laws in many different countries around the globe are making it increasingly difficult for us to find gainful employment, to be free of discrimination, to be safe, to be well protected in our organisations or in our homes and in the places where we live. I would encourage you to not wait for the law to catch up with where, hopefully, we agree society is going, and for you to take the opportunity to think about how, whether it's the folks who identify as trans or it's other marginalised communities in your workplace, how you can be the best employer and the best partner that you possibly can to those folks to make sure that they have things like access to healthcare, access to resources that help them with their mental health, make sure that you are putting policies in place to protect them from physical or emotional harassment, make sure that you are protecting their safety, that you are protecting them if they need to move because they are located in a place that has decided to become inhospitable to them or to their children.
You have a tremendous opportunity to be the HR leaders of tomorrow who set a stake in the ground and said, "Actually, it's not about what we have to do, it's what we should do, going forward".
[0:44:52] David Green: I love that point. As I said, I think more organisations need to be proactive about topics like this rather than just, as you said, wait for legislation to come along. Sarah, it's been wonderful talking to you, thank you so much for being a guest on the Digital HR Leaders podcast. Can you let listeners know how they can find you on social media and find out more about the work that you're doing at HiBob, and find out more about HiBob?
[0:45:15] Sarah Reynolds: Sure. If you'd like to say hi to Bob, please visit us at hibob.com. If you'd like to say hi to me, you can find me on LinkedIn @sarahlizreynolds, or you can find me on the artist formerly known as Twitter for as long as that lasts @fairpaymonster, where I will be tweeting about pay equity as the ship goes down!
[0:45:40] David Green: I love your Twitter handle, Twitter X handle, I like that.
[0:45:42] Sarah Reynolds: I don't know what we're saying these days!
[0:45:45] David Green: No, "The artist formerly known as Twitter", I think that's really a good way of describing it, yeah! I wonder how long it will be afloat, so maybe we get to do another episode of this in maybe a year, two years' time, we can reminisce about what was Twitter.
[0:45:58] Sarah Reynolds: Absolutely.
[0:46:01] David Green: Sarah, thank you so much. And I know you're just about to go out on holiday as well, so I wish you a good holiday as well.
[0:46:06] Sarah Reynolds: Thank you so much for having me, it's been a genuine pleasure.